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Easterly Government Properties DEA recently announced the acquisition of the 100,000- square-foot Internal Revenue Service industrial facility in Ogden, UT. The move comes as part of the company’s acquisition efforts, and following this property buyout, Easterly owns, directly or through its joint venture, 97 properties aggregating 9.5 million square feet.
Fully leased to the General Services Administration for the beneficial use of the IRS, this facility is home to mission-critical operations related to the IRS’ tax submission processing and Digital Fraud Department. The facility meets level 4 security requirements with advanced bomb detection capabilities and chemical sniffing K9s.
Serving as the IRS’ internal mail processing center, IRS – Ogden’s lease is slated for expiry in January 2029 and has two five-year options, which extend the lease through January 2039. This facility is one of only two IRS processing centers within the United States, and the IRS is relocating its Imaging Department from Cincinnati to the Ogden facility and installing four new high-speed scanners as part of its efforts to enhance its on-site operations. This ensures a steady stream of rental revenues for a long period.
Easterly Government Properties has been focused on strategic buyouts. Apart from the aforementioned acquisition, in October, this REIT acquired a 104,136-square-foot facility adjacent to Buckley Space Force Base and occupied by Northrop Grumman Systems Corporation. This is a 100% leased, triple net asset with annual rent escalations.
With a focus on the acquisition, development and management of class A commercial properties leased to the U.S. Government, DEA is well-poised to experience a steady flow of rental revenues over the long term. While shares of this Zacks Rank #2 (Buy) company have risen 6.7% in the past six months, underperforming the industry’s growth of 17.3%, it seems a good entry point, given the growth prospects of this REIT and steady rental cash flows that it is expected to continue experience.
Image Source: Zacks Investment Research
Other Stocks to Consider
Some other top-ranked stocks from the REIT sector are Iron Mountain Incorporated IRM and Cousins Properties CUZ, each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Iron Mountain’s 2024 FFO per share has been raised marginally over the past two months to $4.49.
The Zacks Consensus Estimate for Cousins Properties’ current-year FFO per share has moved marginally north in the past month to $2.68.
Note: Anything related to earnings presented in this write-up represents FFO, a widely used metric to gauge the performance of REITs.